United States District Court, D. South Carolina, Beaufort Division
ORDER AND OPINION
RICHARD MARK GERGEL UNITED STATES DISTRICT JUDGE.
the Court is the Landowners' motion for relief (Dkt. No.
211) from the Court's September 26, 2019 order, which
held the Landowners were not entitled to attorneys' fees
or litigation expenses and directed the parties to share
equally in the expense of the Commission. For the reasons set
forth below, the Landowners' motion for relief is granted
in part and denied in part.
United States of America (the "Government") filed
this action on July 15, 2016 to impose a permanent
restrictive easement over 269.22 acres of land (the
'"Property") located in Beaufort, South
Carolina, which the Landowners had owned in fee simple since
1955. (Dkt. No. 1.) The easement encumbers 179 acres of the
446.3 3-acre industrially zoned parcel and the entire
90.22-acre residentially zoned parcel. It restricts land
development in the flight path of jets in and out of the
adjacent U.S. Marine Corps Air Station notwithstanding
preexisting overlay zoning. (Dkt. No. 140-1.)
Court appointed a three-person Commission pursuant to Rule
71.1 of the Federal Rules of Civil Procedure that was
comprised of Jean H. Toal, Stephen A. Spitz and Alan J.
Reyner. The sole issue in dispute was the appropriate amount
of just compensation due to the Landowners for this
constructive taking. After a three-day trial, the Commission
issued its Report and Recommendation of just compensation, to
which the Government objected. (Dkt. Nos. 164, 172.) After
hearing oral arguments and reviewing the Commission's
Recommendation de novo, the Court made specific
findings of the pre- and post-taking values of both
Industrial and Residential Parcel based on each's highest
and best use, and found that the full award of just
compensation due to the Landowners by the Government is $4,
441, 410.00. (Dkt. No. 180.) The Government has appealed this
finding of just compensation, as well as the Court's
finding of prejudgment interest, to the Court of Appeals for
the Fourth Circuit.
Legal Standard A. Motion for Relief Pursuant to
move for relief from the September 26, 2019 order pursuant to
Rule 60 of the Federal Rules of Civil Procedure (Dkt. No. 214
at 2), which provides in part that the district court, on a
motion brought within a "reasonable time," may
relieve a party from a final judgment or order for six
enumerated reasons: (1) mistake, inadvertence, surprise, or
excusable neglect; (2) newly discovered evidence that, with
reasonable due diligence, could not have been discovered in
time to move for a new trial under Rule 59(b); (3) fraud,
misrepresentation, or misconduct by an opposing party; (4)
the judgment is void; (5) the judgment has been satisfied,
released or discharged, or is based on an early judgment that
has been reversed or vacated, or applying it prospectively is
no longer equitable; or (6) "any other reason that
justifies relief." Fed.R.Civ.P. 60(b), (c). The movant
must demonstrate that it acted promptly, has a meritorious
claim, and that the opposing party will not suffer prejudice
by having the judgment or order set aside. Nat 7
Credit Union Admin. Bd. v. Gray, 1 F.3d 262, 264
(4th Cir. 1993). If these threshold conditions are met, the
district court determines whether the movant satisfies one of
the six enumerated grounds for relief.
Attorneys' Fees and Litigation Expenses in
Fifth Amendment forbids the taking of private property for
public use without "just compensation." U.S. Const,
art. V. The compensation owed is the monetary equivalent of
the property taken, which does not take into account indirect
costs to the property owner caused by the taking. United
State v. Bodcaw Co., 440 U.S. 202, 203 (1979). Thus,
"attorneys' fees and expenses are not embraced
within just compensation." Id. The American
Rule provides that parties bear their own legal fees,
exceptions to which must be explicitly authorized by
Congress. In re Crescent Estates, LLC, 588 F.3d 822,
825-26 (4th Cir. 2009). Imposition of costs against the
Government is generally prohibited and may only be imposed
"to the extent allowed by law." Fed.R.Civ.P.
54(d)(1). Congress explicitly authorized the imposition of
certain costs and attorneys' fees in the Equal Access to
Justice Act ("EAJA"). 28 U.S.C. § 2412.
district court's interpretation of the EAJA is subject to
de novo review, United States v. 50.50 Acres of
Land, 931 F.2d 1349, 1356 (9th Cir. 1991), and the
determination of eligibility for fees is reviewed for abuse
of discretion, Pierce v. Underwood, 487 U.S. 552
(1988); United States v. 515 Granby, LLC,
736 F.3d 309, 314 (4th Cir. 2013). If the district court
determines that the applicant is entitled to fees and
expenses, the court "has considerable discretion in
determining the amount of the fee award." 575
Granby, LLC, 736 F.3d at 318. The court abuses its
discretion when it makes a clear error of law. United
States v. Basham, 561 F.3d 302, 326 (4th Cir. 2009).
This "standard is deferential," 515 Granby,
LLC, 736 at 314, but requires a "suitably informed
deference" that may entail a "canvassing of the
relevant materials," United States v. Paisley,
957 F.2d 1161, 1166, n.3 (4th Cir. 1992).
initial matter, the Court finds that Rule 60 is an
appropriate vehicle for the relief sought by the Landowners,
notwithstanding the Government's argument that Rule 54(b)
is the appropriate vehicle. (Dkt. No. 213 at 1-2.) The Court
entered the September 26, 2019 order before the deadline by
which the Landowners could demonstrate their eligibility for
fees and expenses had passed, and the Landowners now seek to
"resolve what appears to be an administrative
matter." (Dkt. No. 211 at 2.) The Landowners brought
this Rule 60 motion within a reasonable time-twenty-eight
days thereafter. The Court, therefore, considers the
Landowners' arguments as brought under Rule 60 and
declines to convert the motion as brought under Rule 54.
Application for Attorneys'
primary purpose of the [EAJA] was to increase the
accessibility to justice[.]" H.R.Rep. 99-120 at 8. The
statute was enacted in response to concerns that putative
applicants "may be deterred from seeking review of, or
defending against, unreasonable governmental action because
of the expense involved in securing the vindication of their
rights." Sullivan v. Hudson, 490 U.S. 877, 883
(1989). In 1985, the EAJA was amended to "extend and
improve the liability of the United States for
attorneys' fees and other expenses to certain parties who
prevail against the United States[.]" H.R.Rep. 99-120 at
are two methods for a district court to award attorneys'
fees under the EAJA. First, the court must award "fees
and other expenses" to the "prevailing party"
against the United States, "unless the court finds that
the position of the United States was substantially justified
or that special circumstances make an award unjust." 28
U.S.C. § 2412(d)(1)(A). Congress has referred to the
second clause in this mandatory provision as the
Government's "escape clause," H.R.Rep. 99-120
at 9, similarly referenced by the Court of Appeals for the
Fourth Circuit as a "safety valve" designed to
"insure that the Government is not deterred from
advancing in good faith the novel but credible extensions and
interpretations of law that often underlie vigorous
enforcement efforts." Niken v. Holder, 385
Fed.Appx. 299, 302 (4th Cir. 2001). This safety valve
provides the district court with "discretion to deny
awards where equitable considerations dictate an award should
not be made." Id. Second, the district court
may award fees to the "prevailing party" to the
same extent any other party would be liable "under the
common law" or statute. 28 U.S.C. § 2412(b). This
method gives the court discretion to award fees where the
Government acted "in bad faith, vexatiously, wantonly,
or for oppressive reasons." Hyatt v. Shalala, 6
F.3d 250, 254 (4th Cir. 1993).
mandatory and discretionary awards are limited to an
applicant that qualifies as an eligible "party,"
which the EAJA defines, relevant to this matter, as "an
individual whose net worth did not exceed $2, 000, 000 at the
time the civil action was filed." Id. §
2412(d)(2)(B). Similarly, an award under either method is
available only to the "prevailing party," which the
EAJA defines as, "in the case of eminent domain
proceedings, as a party who obtains a final judgment (other
than by settlement), exclusive of interest, the amount of
which is at least as close to the highest valuation of the
property involved that is attested to at trial on behalf of
the property owner as it is to the highest valuation of the
property involved that is attested to at trial on behalf of
the Government." Id. §
2412(d)(2)(H). If the applicant is both a
"party" and the "prevailing party," the
district court proceeds to consider, first, whether the fees
sought are permitted "fees and expenses" under the
statute. Id. § §
2412(d)(2)(A). The court may then proceed to determine
the reasonable amount of fees in light of the statutory cap
on hourly rate and possible upward adjustments from that cap,
id. § 2412(d)(2)(A), and, last, whether that
amount must be apportioned to account for applicants who did
not qualify as a "party."
D. Trask, Jr. is a "party" under the EAJA.
Court previously denied the Landowners' attorneys'
fees application on the basis that they did not demonstrate a
net worth of $2, 000, 000 or less as of July 15, 2016.
See Broaddus v. U.S. Army Corps of Eng'rs, 380
F.3d 162, 168 (4th Cir. 2004) ("[U]nder EAJA, the
applicant bears the burden of establishing
eligibility."). An EAJA applicant must make this
eligibility showing of net worth where, as here, the
Government made a "specific challenge to their financial
eligibility for an award of fees." United States v.
819.8 Acres of Land, 133 F.3d 933 (Table), 1998 WL 3285,
at *3 (10th Cir. 1998) (affirming denial of fees where
landowners "apparently did not submit an affidavit or
any other kind of proof of their financial status").
the EAJA is a partial waiver of sovereign immunity, it must
be strictly construed in the government's favor."
Texas Food Indus. Ass'n. v. U.S. Dep't of
Agric, 81 F.3d 578, 580 (5th Cir. 1996). "The text
of the EAJA does not define 'net worth' or give
instructions on how to calculate an applicant's net
worth." Broaddus, 380 F.3d at 166. But the
statute's accompanying Committee Report and multiple
courts of appeals provide that net worth "is calculated
by subtracting total liabilities from total assets."
H.R.Rep. No. 1418, 96th Cong., 2d Sess. 15 (1980); S.Rep. No.
96-253, 96th Cong., 1st Sess. 17 (1979); accord, e.g.,
Broaddus, 380 F.3d at 167 ("[N]et worth is
calculated by subtracting total liabilities from total
assets."); Bolt v. Merrimack Pharm., Inc., 503
F.3d 913, 916 & n. 2 (9th Cir. 2007); United States
v. Heavrin, 330 F.3d 723, 732 (6th Cir. 2003);
Shooting Star Ranch, L.L.C. v. U.S., 230 F.3d 1176,
1178 (10th Cir. 2000). Therefore, if an EAJA applicant
proffers evidence that "allows the court to subtract
liabilities from assets, thereby enabling the court to
determine an applicant's net worth, then no further
documentation is required." Broaddus, 380 F.3d
at 169; see also Fariasantos v. Rosenberg & Assocs,
LLC, No. 3:13-cv-543, 2015 WL 868090, at *6 (E.D. Va.,
Feb. 27, 2015) (applicant "need only provide sufficient
evidence to allow the Court to determine its net
affidavit of the party's net worth is generally
sufficient evidence to prove net worth under EAJA."
Freeman v. Mukasey, No. 04-35797, 2008 WL 1960838,
at *2 (9th Cir. 2008); see also Shooting Star Ranch, LLC
v. United States, 230 F.2d 1176, 1178 (10th Cir. 2000)
("bare assertion" of net worth from applicant and
"unverified and unsworn letter from its accountant"
are insufficient); United States v. Prabhu, No.
2:04-cv-00589-RCJ-LRL, 2007 WL 9734587, at *1 (D. Nev. Oct.
11, 2007) ("Courts have found such affidavits or other
sworn statements of the fee movant or an accountant setting
out the movant's assets and liabilities sufficient to
demonstrate net worth."). This is because an affidavit
enables the district court to calculate net worth if it
"includes documentation of the applicant's
liabilities and assets." Broaddus, 380 F.3d at
169. Such documentation should conform with generally
accepted accounting principles because "GAAP applies to
EAJA." Id. at 167; see also United States
S.E.C. v. Univ. Exp., Inc., No. 04 Civ. 2322 (GEL), 2009
WL 1835915, at *7 n.12 (S.D.N.Y. June 25, 2009) (court may
"reduce the weight to be given" to balance sheet
that does not conform with GAAP).
Landowners have carried their burden of demonstrating that
William D. Trask, Jr. had a net worth of two million dollars
or less on July 15, 2016. Mr. Trask has submitted a sworn
affidavit in which he states that his net worth was $1, 374,
160.47. This affidavit is supplemented by an itemization
prepared by Mr. Trask of his significant assets and
liabilities at the time, including his 2014 inheritance of an
8.3% interest in the Property from his father, who purchased
the land as a farmer. The Estate Tax Return also submitted
reflects that this inheritance was valued at $4, 553, 071 in
February 2014. In his sworn affidavit, expert land appraiser
Thomas Hartnett opines, on the basis of six studies, that the
value of the inheritance should be reduced by 35% to account
for mere minority control over and the marketability of a
fractional share in real property. (Dkt. Nos. 204, 205.) From
these documents, the Court is able to subtract Mr.
Trask's total liabilities from total assets to calculate
his net worth on July 15, 2016.
Government makes several arguments in opposition to Mr.
Trask's proffered evidence of net worth, first that the
itemization he submitted is a "self-serving document
created in service of this litigation." (Dkt. No. 207 at
1.) Mr. Trask's affidavit and itemization are not
self-serving because they are not merely his own
"conclusory assertions and unsubstantiated
speculation." Larken v. Perkins, 22 Fed.Appx.
114, 115 n. 1 (4th Cir. Oct. 29, 2001). The documents
submitted, moreover, comply with the Court's prior order
for evidence to net worth. See Direct Lineal Descendants
of Jack v. Sec. of Interior, No. 3:13-cv-00657, 2015 WL
1926737, at *3 (D. Nev. Apr. 28, 2015) (affidavit of net
worth sufficient where ...